Published: 18/06/2025 By ECAP
Under Pressure
The British Pound remains under pressure against the Euro, weighed down by soft economic data and geopolitical tensions. Moreover, inflation figures matched forecasts, reinforcing expectations of a Bank of England rate cut in August. Core inflation fell to 3.5%, while headline inflation hit 3.4%. Markets now expect multiple rate cuts this year, with Sterling underperforming as global uncertainty and falling UK growth weigh on sentiment.
The Euro gained further ground as it remains supported by institutional investors who continue buying during price dips, signalling strong underlying demand. Moreover, ECB President Christine Lagarde is pushing for reforms to elevate the Euro’s global reserve status, emphasizing the need for greater geopolitical credibility, economic resilience, and market integration. Despite structural challenges, a weaker U.S. Dollar and rising global diversification trends enhance the Euro’s long-term appeal among central banks and investors.
The U.S. Dollar continues to weaken as investors react to soft economic data, rising fiscal concerns, and political uncertainty. In fact, global fund managers are now more underweight the Dollar than at any time in the past two decades, reflecting a major sentiment shift. With expectations of Federal Reserve rate cuts and fading U.S. exceptionalism, many investors are reallocating away from the Dollar toward alternative global currencies and assets.
Data supplied by GC Partners